Cause and Effect

In information released yesterday, it was announced that by far the largest single cause of homes going into default, possibly followed by foreclosure, is the loss of a job by the homeowner or homeowners. With a homeowner's employment usually as the primary source of mortgage repayment, it is obvious how sever an impact loss of employment can have on making the payments.

"So what? This isn't news", you say. Well, that's probably true. However, what can you do if you find yourself in this situation? If you know for certain that it's only a temporary situation, such as seasonal retooling or staff reductions, and that you definitely will be back at work in a short period of time, you may already have planned how to handle your payments in the interim. If not, you may want to seriously consider initiating the conversation with your lender to see if a temporary forbearance period can be arranged on your normal payments. If your previous payment history is good, a lender will be more inclined to work with you on such a request, especially if you can prove that you do have a job to go back to on a specific date in the near future.

What if your situation is not this type? What if you're out of work and no immediate prospects? There are a number of different things you can try. One is to take on temporary work until you can land a full time position. Another is, once again, to contact the bank holding your mortgage. Se if you and they can work out some form of forbearance on payments or a reduction in the size of your payments. Perhaps an agreement to pay interest only for a specific number of months can be arranged. Again, the bank's willingness to work with you on a solution will be based to some degree on your history of making payments in full and on time up to now. Another type of loan mod that may work is to extend the term of the loan. Say your present mortgage is for thirty years. Perhaps you can get the bank to change the terms to a forty year loan, payments to commence in three months. That will give you both a smaller payment and some time to try to gain meaningful employment before you have to resume payments.

Every person's situation is unique, so what may work for one won't necessarily work for another. But give it a try! Remember: the home you save IS your own!
Good luck.